How To Be A Good Investor

How to be a good investor
How to be a good investor

As the world progresses, more people understand the need to invest and how investment helps you attain financial freedom, especially with the rule of compounding.

The right investment, regardless of the risk involved, provides you with long-term financial security, rather than just putting your money away in a bank or using the traditional savings system. It also allows you to build wealth at your own pace while giving you access to compete with other investors.

For someone new to investing and still trying to understand how it works, choosing what to invest in can be daunting, as there are many factors to consider.

If you are looking to avoid scams and be a good investor, here are some things you need to know:

Commit to a certain amount of money

For anyone looking to be a good investor, discipline and commitment are key to growing your finances. It is important to adopt a sense of financial discipline, as it helps you develop the habit of setting aside a particular percentage of your weekly or monthly earnings towards your investments. While doing this, it is also important to understand what you want to achieve at the end of your investment period. A target or goal-based investment and follow-up action plans make it easy to focus and commit towards achieving your goals

Understand how the market works

Good investing involves understanding the market dynamics and how things work. Reading books on finance and investments, taking courses, and following trusted financial advisors and investment, experts are key to making the right investment choices. It is also essential to research the options available to you: the company, its investment strategies, past performances and its average annual return. Warren Buffet, one of the world’s greatest investors, said, “Never invest in a business you cannot understand.” If you don’t understand it, don’t do it. Understanding the rules of compounding is also essential in investing. The higher your investment, the more returns you’re likely to make. 

Know what type of investor you are

There are many types of investors, but the most common ones are the high-risk investor, moderate or medium risk investor and low-risk investor. As a good investor, you need to “know thyself” and your level of risk appetite. Although investments are often long-term, the low-risk investor prefers to stick to a shorter investment period and safer investment options, as they are usually risk-averse. 

The medium-risk investor has a moderate risk level and prefers to invest in low-average risk assets like real estate and stable stocks, while the high-risk investor goes all in. They are not scared of taking huge financial risks with high promising returns. These types of investors invest mainly in stocks and crypto, and because the goal is usually long term, they are not afraid to invest.

To make the right choice of investment, it is important to know what category of investor you fall under.

Diversify

Diversification is a key investment strategy that helps reduce an investor’s risk by allowing them to allocate funds or capital across different investment platforms and options. It also offers the opportunity to make different returns across these options. The Rise app offers three different investment options for our users, who are looking to diversify their portfolio while promising decent returns.

Avoid get-rich-schemes

When the offer sounds too good to be true, then fly as far as your wings can carry you.

Learn to drain the noise

A good investor knows not to follow the crowd for fear of missing out. When the market is red and everyone seems to sell, a good investor knows it is one of the downsides of the market, and because they have confidence in their choice of investment, know that everything will go back up again.

Learn the language of the market

The financial/investment market has a lingo, and a good investor knows it is important to learn, as it makes it easier to understand and navigate the market. Words like FOMO, bear and bull market, APR, ROI, dollar-cost averaging, and the most common one on the internet right now, WAGMI, are some of the investment lingo out there.

Lastly, a good investor plans a clear, defined exit strategy for when the markets are down. With Rise, you can become an even better investor, as it helps you achieve all of this while managing your investment and providing you with the best financial updates. Get started.